A recent study has revealed that 66 percent of global travel companies are witnessing declines in their profit margins, primarily due to outdated and inefficient payment systems. The research underscores an urgent need for these companies to upgrade their payment technologies, especially with the growing complexity of cross-border transactions.
Challenges with new payment methods on the rise
According to a collaborative study by Airwallex and Skift Research, which surveyed 473 travel executives across seven global marketsโAustralia, China, Hong Kong SAR, Israel, Singapore, the United Kingdom, and the United Statesโ70 per cent of these companies face difficulties due to the diversity of payment methods. This issue is compounded by the fact that these cross-border transactions constitute a significant portion of their revenue.
Jack Zhang, Co-founder and CEO at Airwallex, remarked on the findings, stating, โAs global travel continues to boom, travel companies increasingly rely on quick and seamless cross-border payments to surpass customer expectations at every touchpoint. However, our latest study shows that slow and outdated payment processes are increasing the cost of moving money internationally, which is eating into their profits – modest at the best of times.โ
He further highlighted the benefits of modernising financial operations: “Modernising their financial operations with a unified and scalable payment solution will be critical to reducing the cost and friction associated with managing cross-border transactions. For smaller players, this can be what levels the playing field, enabling them to compete with larger, more established counterparts.โ
Global payment intricacies and the push for innovation
The study indicates that nearly 40 per cent of travel executives report half of their revenue comes from international customer payments, underlining the importance of efficient cross-border transaction management. With 88 per cent of companies frequently making payments to suppliers or vendors in foreign currencies, the volatility of foreign exchange rates presents another layer of complexity.
Rafat Ali, CEO and Founder of Skift, shared insights on the strategic significance of streamlined financial operations. “Our survey of global travel executives uncovered new, unique, and even surprising insights into why unified payment and financial systems are critical in meeting today’s traveller expectations,” he said. “Amid an unprecedented rise in international tourism, the report intends to give travel companies a framework to expand their knowledge base and build more efficient, effective, and profitable businesses through modernised payment and financial operations systems.”
The research suggests a strong consensus among travel finance executives that outdated or overly complex payment systems directly impact their organisational efficiency and profit margins. Nine in 10 report at least a 2 percent erosion and over one-third lose 10 percent. As a result, 90 per cent of travel executives are prioritising technological upgrades to their payment and financial operations systems, with 80 per cent showing interest in an all-in-one payment and financial operations platform.
In summary, as the travel sector continues to navigate a post-pandemic world, the capacity to efficiently handle complex, international payment systems is crucial for maintaining profitability and operational effectiveness.
